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No Depression?
It's becoming increasingly clear that the battle of ideas over all things related to our newly certified recession and $8.5 trillion (so far) bailout is boiling down to a fascinating revisionist face-off over the Great Depression: its causes, its effects, its solutions. Are we indeed in, or headed toward, the worst economic crisis since the Great Depression, and if so what lessons apply? A Greek-tragedy twist on all this is that Fed Chair Ben Bernanke is an economic historian who specialized in...the Great Depression! As such, his thoughts on the analogy are both fascinating and crucial. Here's what he said yesterday:
"Well, you hear a lot of loose talk, but let me just ... say, as a scholar of the Great Depression -- and I've written books about the Depression and been very interested in this since I was in graduate school, there's no comparison," Bernanke said in a question period after an address in Austin, Texas.
Bernanke cited "an order-of-magnitude difference" in the current situation compared to the 1930s.
"During the 1930s, there was a worldwide depression that lasted for about 12 years and was only ended by a world war," he said.
"During that time, the unemployment rate went to 25 percent, at least, based on the data that we have. The real GDP (gross domestic product) fell by one-third. About a third of all of the banks failed. The stock market fell 90 percent." [...]
Still, the Fed chief said lessons learned from the Depression may still apply today, including the "excessively tight monetary policy" that led to higher interest rates and deflation of about 10 percent a year over the first three years of the 1930s.
"We have learned from that experience that monetary policy has got to be proactive and supportive of the economy in a situation of difficult financial conditions," he said.
"The other part was -- the other error, the big mistake that policymakers made in the early '30s was they essentially allowed the financial system to collapse and they didn't do anything about it. The Federal Reserve did no action as the banks failed by the hundreds and the thousands."
More here, including a section about President Bush that seems to contradict Bernanke's this-ain't-the-'30s view:
President George W. Bush said in an interview released Monday that Bernanke and Treasury Secretary Henry Paulson warned him weeks ago that bold action was needed to avert a new Great Depression.
"I can remember sitting in the Roosevelt Room with Hank Paulson and Ben Bernanke and others, and they said to me that if we don't act boldly, Mr. President, we could be in a depression greater than the Great Depression," Bush told ABC News.
What has reason been writing on the Great Depression for the past 40 years?
* In January 2004, Julian Sanchez conducted a brief interview with Jim Powell, author of FDR's Folly: How Roosevelt and His New Deal Prolonged the Great Depression.
* Four years later, Nick Gillespie interviewed The Forgotten Man author Amity Shlaes.
* In October 2004, Damon Root looked at "How FDR made life worse for African Americans."
* In June of this year, we polled seven market-friendly economic observers, all of whom (unlike me!) pronounced that we were either in or entering recession.
* At the height of bailout panic, we sampled another batch of libertarian economists about what they thought.
* And in a wonderfully prescient November 2006 piece, Brian Doherty discussed among five economic analysts (including Milton Friedman and Ron Paul) whether we can bank on the Federal Reserve, and specifically what they thought of Ben Bernanke's analyses of the Great Depression.
|12.2.08 @ 9:42AM|#
More here, including a section about President Bush that
seems to contradict Bernanke's this-ain't-the-'30s view:
The most likely scenario here is that Bernanke used the word
"depression" - as in "there could be a depression," or "the worse
economy since the Great Depression," and Bush's brain went "Golly,
worse than the Great Depression!"
If this does turn into a depression, it will probably look more
like the ones we had in 1800s than the Big One.
|12.2.08 @ 9:46AM|#
I'm going where there's no depression
To a better land that's free from care
I'll leave this world of toil and trouble
My home's in heaven
I'm going there
The only thing to look forward to in the new depression: a sharp
uptick in despondent music and novels. Put all your money in gloom,
people.
|12.2.08 @ 9:50AM|#
In June of this year, we polled seven market-friendly
economic observers, all of whom (unlike me!) pronounced that we
were either in or entering recession.
Considering the NBER just proclaimed the start of the official
recession, we would've been just entering it in June. Talk about
being spot on with the forecasting there!
!|12.2.08 @ 9:53AM|#
All we need is for the federal government to force everyone to take a prozac, then the depression will go away.
robc|12.2.08 @ 9:59AM|#
Recession started July1. NBER is wrong.
Why do people keep using the word "official" when talking about
NBER declaring a recession? They have no god-given rate to be the
official arbiter of these things.
|12.2.08 @ 10:01AM|#
I'm happily awaiting depression 2.0, Hallelujah!
Oh, why don't you work
Like other men do?
How the hell can I work
When the skies are so blue?
Chorus:
Hallelujah! I'm a bum,
Hallelujah bum again,
Hallelujah! give us a handout
To revive us again.
Oh, I love my boss
And my boss loves me,
And that is the reason
I'm so hungry.
Well, springtime has come
And I'm just out of jail,
Without any money,
Without any bail.
Oh why don't you save all
The money you earn?
Well if I didn't eat,
I'd have money to burn.
Oh, I like my boss,
He's a good friend of mine,
And that's why I'm standing
Out in the breadline.
I can't buy a job
'cause I ain't got the dough
So I ride in a boxcar
'cause I'm a hobo.
I went to a house and
I knocked on the door,
The lady said, "Scram, bum,
You've been here before!"
I went to a house, and
I asked for some bread;
A lady came out, says,
"The baker is dead."
I went to a bar and
I asked for a drink,
They gave me a glass
And they showed me the sink.
Oh why don't you work
Like other folks do?
How can I get a job
When you're holding down two?
Whenever I get all
The money I earn,
The boss will be broke
And to work he must turn.
When springtime does come,
Oh won't we have fun,
We'll throw up our jobs
And we'll go on the bum.
Kolohe|12.2.08 @ 10:03AM|#
The only thing to look forward to in the new depression: a
sharp uptick in despondent music and novels. Put all your money in
gloom, people.
SHUT UP EMO ECONOMY!
concerned observer|12.2.08 @ 10:04AM|#
When are you libertards going to wake up and recognized that the government needs to take the reins and guide this wagon out of the swamp and back to safety.
|12.2.08 @ 10:07AM|#
Depression? Jesus, we hype to death even economic downturns
now.
I'm curious why the government seems so interested in fanning the
flames of panic. Obviously, they want to have carte blanche to do
these various bailouts, but one would think that even if the
economy were a total disaster--which I don't think is remotely the
case--that the government would want to avoid panicking consumers.
But they are going out of their way to do just that. Why?
|12.2.08 @ 10:07AM|#
robc | December 2, 2008, 9:59am | #
Recession started July1. NBER is wrong.
Why do people keep using the word "official" when talking about
NBER declaring a recession? They have no god-given rate to be the
official arbiter of these things.
And you do?
|12.2.08 @ 10:09AM|#
"Are you depressed? Has our interest rates got you down? My name is Meatwad, and today I'm here to offer you a once-in-a-lifetime opportunity. Sell your organs! LIVE! Over the internet! Get money back on your baby! That didn't sound right. Where's my sheet?"
|12.2.08 @ 10:10AM|#
I've personally been in a recession since my WaMu stock died a lonely and pathetic death.
|12.2.08 @ 10:12AM|#
The NBER reported that the recession began in December
07.
This is what I get from reading headlines, not press releases.
Thanks for the correction. Either way, the "heading into a
recession" moniker remains accurate.
|12.2.08 @ 10:20AM|#
Well Pro Liberate - although nothing makes much sense anymore in
trhe communist nation we have been living in, the reason is that
they need the big money grab to prop up their personal fortunes in
the market. So the bigger the screaming about depression, the more
money they can steal for their own stock propping.
Now the other trick involved is making the moola mandating all a
big fat secret - so as not to "shock the markets " when the public
"see which players" lined up for the big payola.
That also of course protects the shady blatantly criminal
implementation and waste, no doubt. Plus, all the pig trough pols
can claim they enver knew they voted for 100 billion for the
retirement stock....
So you see - there is a method to their madness, on multiple
fronts.
|12.2.08 @ 10:21AM|#
" depression that lasted for about 12 years and was only ended
by a world war,"
Crap. Bernanke believes the "world war two ended the depression"
canard. What a god damned ignoramus.
-jcr
|12.2.08 @ 10:23AM|#
http://faq.bea.gov/cgi-bin/bea.cfg/php/enduser/std_adp.php?p_faqid=485&p_created=1206966790
Question
Recession: How is that defined?
Answer
In general usage, the word recession connotes a marked slippage in
economic activity. While gross domestic product (GDP) is the
broadest measure of economic activity, the often-cited
identification of a recession with two consecutive quarters of
negative GDP growth is not an official designation. The designation
of a recession is the province of a committee of experts at the
National Bureau of Economic Research (NBER), a private
non-profit research organization that focuses on understanding the
U.S. economy. The NBER recession is a monthly concept that takes
account of a number of monthly indicators-such as employment,
personal income, and industrial production-as well as quarterly GDP
growth. Therefore, while negative GDP growth and recessions closely
track each other, the consideration by the NBER of the monthly
indicators, especially employment, means that the identification of
a recession with two consecutive quarters of negative GDP growth
does not always hold. For information on recession, or
business-cycle, dating, see:
http://www.nber.org/cycles/jan08bcdc_memo.html.
|12.2.08 @ 10:34AM|#
Personally, while the OMG, BLS, BEA and NBER are fine analysts
of economic conditions, I've found that the SIV has a good track
record in pinpointing the start of recessions.
To the best of my knowledge, they're 1 for 1.
|12.2.08 @ 10:36AM|#
Didn't some guy who co-starred in a movie with a monkey once say that a recession is when your neighbor loses his job and that a depression is when you lose your job whereas a recovery is when Jimmy Carter loses his?
|12.2.08 @ 10:40AM|#
SiliconDoc,
It's a mad, mad, mad, mad world.
libertymike,
You mean Charlton Heston? "You maniacs!"
joe,
One thing about recessions that I've observed in my lifetime--they
(they who measure such things) are always changing their minds
about when, exactly, a given recession begins and ends. In other
words, everyone is right!
|12.2.08 @ 10:41AM|#
We need another massive high-profile make-work jobs program at the federal level, preferably one which will drive actual business enterprises into bankruptcy. We need to institute a massive tax on cellphones and computers, to pay for an expansion of AMTRAK. And we can require a TSA agent on every car, to rummage through the passengers' personal effects. Because they might have bombs, or something.
SIV|12.2.08 @ 10:42AM|#
ProLib,
NBER doesn't change their mind. they just wait till they are sure
and backdate it to the start.They will do the same thing if and
when it ends.
Alan Vanneman|12.2.08 @ 10:43AM|#
I look forward to forthcoming Reason articles on FDR,
including
The Time FDR Burned Down An Orphanage And Laughed
The Time FDR Ran Over A Basket Of Kittens And Laughed
The Time FDR Got Drunk And Raped A 12-Year-Old Black Girl (And
Laughed)
|12.2.08 @ 10:43AM|#
If we're going to start doing stupid New Dealish stuff, can we at least create a useful jobs program? Like building a space elevator?
SIV|12.2.08 @ 10:51AM|#
AV,
The Time FDR signed the law making posession and sale of marijuana
a Federal offense.
The Time FDR signed a law making posession of firearms with
arbitrary mechanical features a Federal offense.
The Time FDR signed a law making growing agricultural commodities,
such as wheat for your own personal consumption, a Federal
offense.
I could go on .........
That SOB FDR infringed the hell out of our property rights.It would
have been better for our liberty if he just raped a burning
orphanage full of kittens and 12 y/o girls.
Eleaore Roosevelt|12.2.08 @ 10:55AM|#
Alan, I can assure you that Franklin was quiet serious while raping, but did take a certain joie de vivre in his other hobbies.
|12.2.08 @ 10:55AM|#
The republicrats and evangelicrats must be beside themselves. They were lied into a war, and up to 3 months ago McCain/Palin were telling our country the economy was good, and the "fundamentals strong." Now, yesterday, we discover their lies again and that the counntry has been in a recession which started over a year ago. The majority of citizens of the most wonderful country on the planet saw thru their lies. Our country deserves a better opposition that the "rats" I have just described. Liars, cheats, hypocrites.....
|12.2.08 @ 11:08AM|#
If you were to ask me who's version of a story to believe, GWB's or helicopter Ben, unless it was baseball related, I'd side with the chopper.
Alger Hiss|12.2.08 @ 11:09AM|#
The time that Vanneman blew FDR's plegical penis.
Or the time Vanneman and Joe blew each other while FDR
watched
Or the time Vanneman sat in in FDR's lap as he pushed them through
the Rose Garden and sung sweet lullabies,
Am I accusing any one of Homosexual admiration? I'm Alger Hiss,
that is what I do!
|12.2.08 @ 11:13AM|#
I'm Alger Hiss, that is what I do!
I see you're still in the habit of feigning superiority despite
seeing your political and economic theories lying in tatters,
too.
You're Alger Hiss, that's what you do!
robc|12.2.08 @ 11:17AM|#
joe,
And you do?
Nope. My claim in no more or less official than theirs. The only
difference is Im applying a strict, measurable, repeatable
standard. They are looking at a bunch of things and deciding if it
seems like that is recessiony enough. I think the statistics they
look at show what caused the recession to occur 6 months later, it
was a definate forewarning of the impending recession, but it wasnt
itself a recession.
But I like strict black and white terminology.
Alger Hiss|12.2.08 @ 11:19AM|#
joe | December 2, 2008, 11:13am | #
I'm Alger Hiss, that is what I do!
I see you're still in the habit of feigning superiority despite
seeing your political and economic theories lying in tatters,
too.
You're Alger Hiss, that's what you do!
One day there will be a new Stalin who will have you trembling in
fear!
How can you deny the prescience of Lenin this late in the stage of
Capitalism?
|12.2.08 @ 11:19AM|#
pro Libertate:
I've never understood why the Left doesn't like the space program.
It's pretty much a perfect embodiment in their belief that
government should run a bunch of companies as inefficiently as
possible, so as to employ as many people as possible in
manufacturing jobs.
The only thing missing is that we don't have a United Space
Workers.
If we did, they'd be bailing out NASA and subsidizing trips to the
moon.
|12.2.08 @ 11:20AM|#
If the Federal Reserve did nothing in response to the financial
crisis, there could have been another Great Depression. If FDIC
failed to meet its obligations, or even if closed too many banks,
there could have been a Great Depression. It could be that FDIC
will require a "bailout."
I don't think that anything like what Bernanke and Paulson came up
with was necessary to avoid another Great Depression.
|12.2.08 @ 11:22AM|#
But I like strict black and white terminology.
But strict, black and white terminology to describe something as
complex as an economy is idiotic. There are different kinds of
recessions. A period of time where GDP growth is 0.1% for 2 years
and unemployment rises from 5% to 7% does not fit the "2 straight
quarters of declining GDP" definition, but will look and feel like
a recession. Just because the NBER and other economists can grasp
defining something as a confluence of multiple factors, but you
can't (or don't want to) doesn't mean that they should dumb down
the definition for you.
|12.2.08 @ 11:23AM|#
robc,
Nope. My claim in no more or less official than
theirs.
As a matter of fact, your claim is quite a bit less official. Less
official, that is, than the body tasked with providing the official
measurement of when recessions begin and end.
I'm supposed to take their analysis LESS seriously because they use
more data and look at it closer?
Look, one measure would call a year that saw 0.8% real GDP decline,
which saw -0.4% Q1 annual growth, +0.1% Q2 growth, -0.4% Q3 growth,
and +0.1% Q4 growth a recession. The other would not. I know which
one I'm going to believe.
|12.2.08 @ 11:24AM|#
People also forget, there's a difference between the Great
Depression and A depression.
A depression is:
In economics, a depression is a sustained, long downturn in one or
more economies. It is more severe than a recession, which is seen
as a normal downturn in the business cycle. Considered a rare but
extreme form of recession, a depression is characterized by
abnormal increases in unemployment, restriction of credit,
shrinking output and investment, numerous bankruptcies, reduced
amounts of trade and commerce, as well as highly volatile relative
currency value fluctuations, mostly devaluations. Price deflation
or hyperinflation are also common elements of a depression.
A common rule of thumb for a depression is a 10 percent decline in
gross domestic product (GDP). The corresponding rule of thumb for
recession is two quarters of negative GDP growth. Using these
definitions, the threshold for depression is vastly more severe
than that for recession. A GDP decline of more than 10 percent has
not occurred in the United States since the 1930s.
A proposed definition for depression is a sustained recessionary
period in which the population is forced to dispose of tangible
assets to fund every day living, as was seen in the US and in
Germany in the 1930s.
Alger Hiss|12.2.08 @ 11:26AM|#
Bill Woolsey | December 2, 2008, 11:20am | #
If the Federal Reserve did nothing in response to the financial
crisis, there could have been another Great Depression. If FDIC
failed to meet its obligations, or even if closed too many banks,
there could have been a Great Depression. It could be that FDIC
will require a "bailout."
I don't think that anything like what Bernanke and Paulson came up
with was necessary to avoid another Great Depression.
You Social Democrats believe you are 'saving Capitalism from the
Capitalist', but really you are just fanning the flames of its
destruction when the workers revolt when they get hit with the
bill. For that you have my thanks.
|12.2.08 @ 11:27AM|#
If we did, they'd be bailing out NASA and subsidizing trips
to the moon.
Ralph Kramden already has the latter covered.
robc|12.2.08 @ 11:27AM|#
Mo,
Im quite capable of understanding something as a confluence of
mutliple factors, but it they want to "define something as a
confluence of mulitple factors" then publish the definition so a
committee is no longer necessary, anyone with all the data can plug
it into the formula and determine it.
They dont do that. They look at all the factors, discuss it as a
committee and decide if it is recessiony enough to call. Which is
all well and good, they are wiser economically than me.
A period of time where GDP growth is 0.1% for 2 years and
unemployment rises from 5% to 7% does not fit the "2 straight
quarters of declining GDP" definition, but will look and feel like
a recession.
No, it probably doesnt. The word recession implies something
receding. 0.1% growth is growth, it isnt receding. Yeah, employment
is receding, but that just means the 93% are being hella
productive.
robc|12.2.08 @ 11:29AM|#
than the body tasked with providing the official measurement
of when recessions begin and end.
Tasked by whom?
Unless it is God, they are exactly the same level of official as
me.
BDB|12.2.08 @ 11:29AM|#
In fact I'd much rather be forced to fund space exploration than be forced to fund 99% of the other things in the federal budget.
The Angry Optimist|12.2.08 @ 11:30AM|#
"Money doesn't just grow on trees! You have to get it...from the cloner."
|12.2.08 @ 11:30AM|#
If GDP only rises 0.1% in absolute terms, it is declining in
real terms; that is, it is receding.
Which is why you'd see unemployment rise 2 points.
|12.2.08 @ 11:31AM|#
If the economy grows 0.1% is real terms, on the other hand, unemployment won't rise, at least not to any meaningful degree.
robc|12.2.08 @ 11:32AM|#
joe,
If GDP only rises 0.1% in absolute terms, it is declining in
real terms
Not if we are also in a deflationary period. In that case, it is
much better that 0.1% in real terms.
|12.2.08 @ 11:32AM|#
Tasked by whom?
Read the link.
Unless it is God, they are exactly the same level of official
as me.
That's not what the word "official" means.
robc|12.2.08 @ 11:33AM|#
joe,
If the economy grows 0.1% is real terms, on the other hand,
unemployment won't rise, at least not to any meaningful
degree.
It will if there is significant productivity growth. But you are
generally right.
|12.2.08 @ 11:33AM|#
Not if we are also in a deflationary period.
Even then, there is population growth.
robc|12.2.08 @ 11:36AM|#
That's not what the word "official" means.
Sure, it means a person charged with a duty. But, anyone can charge
someone with a duty. NBER and I have both been charged with
declaring a recession (I did it to myself just now while typing
this). To be honest with you, I respect my own charge more than
whoever charged NBER with the duty.
Thus, I am even more official than NBER.
If God had charged NBER with the duty, I would respect that and
deny my officialness.
robc|12.2.08 @ 11:37AM|#
Even then, there is population growth.
That doesnt factor into real v absolute dollar value.
|12.2.08 @ 11:37AM|#
You are not authorized to charge anyone with any duties, beyond
your own family.
The federal government is.
You might as well tell me that you have official clearance to dig
up the street, just like the DPW. Hey, man, I trust myself more
than the government.
|12.2.08 @ 11:37AM|#
Oooh, a space union. Yes, that would work almost as good as the
Lunar Sex Prize.
The new space workers' union should be called, of course, The
Federation.
|12.2.08 @ 11:38AM|#
Assuming inflation of 0%, you could have a situation where the economy grows at 0.5% and still shrinks on a per person basis. If the economy grows at a lower rate than population growth (0.89%), unemployment will rise, productivity will go down and you could still have positive real economic growth. Per capita GDP, however, would go down though.
Seward|12.2.08 @ 11:39AM|#
joe,
If this does turn into a depression, it will probably look more
like the ones we had in 1800s than the Big One.
Which one? The depression caused by Jefferson's embargo was a Big
One after all, in light of its length and depth.
Pro Libertate,
I'm curious why the government seems so interested in fanning
the flames of panic.
Public choice economics probably explains that at least to some
degree.
______________________________________
Milton Friedman makes the point that it was the discretion which
the Fed had over monetary policy that was the root of the problem
of the start of the GD. Less discretion in other words would have
led to a better result.
|12.2.08 @ 11:39AM|#
That doesnt factor into real v absolute dollar
value.
No, but it factors into real vs. nominal GDP per capita. If our
economy grew 2% while out population doubled, there would be people
starving the streets.
But hey, the absolute dollar value increased, so it's a growth
period!
Seward|12.2.08 @ 11:42AM|#
Then again, we may want to skip Friedman's recommendation and jump right into free banking.
|12.2.08 @ 11:43AM|#
Honestly. Having the government determine or define what the state of the economy is borders on the absurd. Maybe instead of the Censor [insert gong sound, à la Led Zeppelin's "What Is and What Should Never Be"], I should be promoting the Anti-Government. A body outside of the federal government that operates in opposition to the government. "Recession in 2007? Ha! Lies!"
robc|12.2.08 @ 11:44AM|#
joe,
You are not authorized to charge anyone with any duties, beyond
your own family.
I didnt extend my charge beyond my own family. I appointed myself.
:)
The federal government is.
No they arent. I doubt you can find a constitutional passage that
authorizes this charge.
The Angry Optimist|12.2.08 @ 11:44AM|#
You might as well tell me that you have official clearance
to dig up the street, just like the DPW.
What ramifications are there for robc to contend with the NBER's
assessment? None, and he could be right, for all you know (or
depending on the standards set).
Digging up the street has a direct impact on other people;
quibbling with NBER does not.
Seward|12.2.08 @ 11:45AM|#
Pro Libertate,
Well, I really don't know how useful the snapshot approach is. We
get very little feel for what the economy is doing over time.
Indeed, the snapshot approach we seem to get is probably also
inherently politicized.
|12.2.08 @ 11:46AM|#
Pro Lib,
The NBER is a private, non-profit group. So it's not the government
determining the start of the recession.
robc|12.2.08 @ 11:47AM|#
Mo and joe,
I assumed we were working with per capita numbers from the
beginning.
If we are working with raw GDP numbers, I concede the point on
population growth.
Lets just assume going foward we are talking about real per capita
GDP.
|12.2.08 @ 11:48AM|#
"Money doesn't just grow on trees! You have to get it...from
the cloner."
"Well, obviously, I am a drug lord in this scene. Where the hell
else do you think a guy like me gets this amount of cash?"
Syd Henderson|12.2.08 @ 11:48AM|#
Are we indeed in, or headed toward, the worst economic
crisis since the Great Depression, and if so what lessons
apply?
Very probably.
joe | December 2, 2008, 9:42am | #
If this does turn into a depression, it will probably look more
like the ones we had in 1800s than the Big One.
Like the Long Depression of 1873-96?
I'm sure you're thinking of the Panics of 1873 (which was over by
1879) or 1893-96. It does resemble those a lot. The first of these
happened after the Credit Mobilier scandal and the failure of the
major bank Jay Cooke and company. The second started off with the
bankruptcy of Philadelphia and Reading Railroad and was pretty
nasty. The period between the Panics wasn't all that bad unless you
were a farmer, but there was a severe shortage of currency which is
why the Populists wanted Free Silver and got so many votes in
1892.
|12.2.08 @ 11:48AM|#
TAO,
You have just demonstrated the robc's quibbling does not victimize
anyone.
You have not demonstrated that he is authorized to make official
statements about recessions. That, btw, is what we were talking
about - whether the NBER's pronouncements are official.
robc|12.2.08 @ 11:52AM|#
TAO,
Thanks, you get the point. This seems to all be a "gotcha! I was
right" thing for joe. When I tried to make a bet with him over
start of recession back early in the year, I specifically defined
recession as the textbook definition. He should have taken the bet,
I think he ends up winning it (although I cant remember the cutoff,
but I think 3rd and 4th quarter receding would have given him the
win).
I personally dont care how you define recession, whether we are
technically in one or not changes nothing at all. Its just a label.
A simple formula, a complicated formula, a committee, they all
work, none are any more or less legitimate than others.
The Angry Optimist|12.2.08 @ 11:52AM|#
That, btw, is what we were talking about - whether the
NBER's pronouncements are official.
1. Why in the world does that matter?
2. Isn't this a mere logomachy at this point?
Seward|12.2.08 @ 11:52AM|#
joe,
Stepping out of the specifics of your discussion, as a general
rule, the source of a statement by itself is not determinitive of
its accuracy. The government is often wrong after all. So the fact
that a claim is "official" shouldn't lend that much weight to it by
itself.
|12.2.08 @ 11:53AM|#
Syd,
I hope not.
As you note, both of those panics/depressions started with
collapses in the financial sector, which caused cascading failures
throughout the economy. Well, we're seeing one of those right now.
I certainly hope there isn't another in a few years.
robc,
If you were talking about GDP per cap from the beginning, why would
you write: Not if we are also in a deflationary period. In that
case, it is much better that 0.1% in real terms?
robc|12.2.08 @ 11:53AM|#
joe,
Its just a fucking label. It matters none at all whether it is
official or not. Different people define it differently.
Why does there even need to be an "official" recession definition?
It doesnt change the underlying economic conditions at all.
Alger Hiss|12.2.08 @ 11:54AM|#
Pro Libertate | December 2, 2008, 11:43am | #
Honestly. Having the government determine or define what the state
of the economy is borders on the absurd. Maybe instead of the
Censor [insert gong sound, à la Led Zeppelin's "What Is and What
Should Never Be"], I should be promoting the Anti-Government. A
body outside of the federal government that operates in opposition
to the government. "Recession in 2007? Ha! Lies!"
Libertarians can't even prevent establishmentarian Social Democrats
from dominating your message boards, how do you propose to set up a
counter authority? Have libertarians ever been at the helm of a
country, large or small? Well, we have!
concerned observer|12.2.08 @ 11:54AM|#
Of course there's going to be a depression. After 8 years of libertard wingnut policies it was bound to happen at some point. 20's and 30's all over again.
|12.2.08 @ 11:54AM|#
TAO,
1. Why in the world does that matter? I don't know. robc
insisted that they are not an official recession-calling body, and
I pointed out that they are.
2. Isn't this a mere logomachy at this point?
Umm...yes.
|12.2.08 @ 11:55AM|#
Using only GDP as a measurement is still a blunt instrument.
It's like trying to use BMI as a measurement of health. Sure if you
get relatively fatter, often times you're less healthy. Sometimes
it just means you've put on more muscle mass. Or you may have been
too thin before.
If real, per capita GDP goes up 2%, but nominal GDP is flat and
you're in a nasty deflationary environment that doesn't indicate a
healthy economy. If you get 15 economists in a room, you're going
to get 15 different opinions of what different sets of data mean,
which is why you can't go by simple black and white rules. We don't
live in a Manichean world rob, get over it.
concerned observer|12.2.08 @ 11:56AM|#
And robc seems to be spouting off about how he is more official than someone else unless God makes someone else more official. Great fun.
robc|12.2.08 @ 11:56AM|#
joe,
If you were talking about GDP per cap from the beginning, why
would you write
Deflationary doesnt depend on per cap. If the economy is growing at
0.1% absolute (per cap) and the inflation rate is -3%, then the
real GDP (per cap) is much higher.
Two separate issues - per cap and real v absolute.
|12.2.08 @ 11:56AM|#
Mo,
If the government designates a private actor as the official
spokesman for an issue, then the independence of that organization
is a matter for consideration.
Incidentally, I don't necessarily have a problem with the NBER or
its conclusions.
concerned observer|12.2.08 @ 11:59AM|#
Stop spoofing me wingnuts! If you fuck with bull you will get the horns!
|12.2.08 @ 12:00PM|#
joe,
Its just a fucking label. It matters none at all whether it is
official or not. Different people define it differently.i>
Then why have you spent all of this effort insisting that the
NBER's definition is wrong, and your right?
robc|12.2.08 @ 12:01PM|#
Mo,
I never claimed that a non-recession equaled a healthy economy. I
dont think we had a healthy economy during the boom days of the
90s, because of underlying issues that wouldnt rear their heads for
another 10 years.
I just think if we are going to use technical terms they should
have technical definitions.
Repeatability is a hallmark of science. Anyone with access to the
same data that NBER has should be able to determine "recession or
no" with exact same results as NBER. 100% of the time. There
shouldnt be a need for a committee. Just plug and chug.
Now, that may mean that sometimes it gives silly results and the
formula needs to be modified and NBER may have a different formula
than some other group of economists puts together, but at least
both of them will have repeatability on their side.
SIV|12.2.08 @ 12:02PM|#
robc,
Do you do your own judging at home of gymnastics and figure skating
competitions and award imaginary gold medals to the "real winners"
?
concerned observer|12.2.08 @ 12:03PM|#
All this spoofing is childish and immature. And there is a precedent for suing for online harassment.
robc|12.2.08 @ 12:03PM|#
Then why have you spent all of this effort insisting that
the NBER's definition is wrong, and your right?
Because that proves the point. My claim of the label is just as
legitimate as NBER's. Actually, since mine is repeatable and theirs
isnt, mine is better science.
SIV|12.2.08 @ 12:03PM|#
Repeatability is a hallmark of science.
I thought we were discussing economics here?
|12.2.08 @ 12:04PM|#
I'm curious why the government seems so interested in
fanning the flames of panic.
The whole aim of practical politics is to keep the populace alarmed
(and hence clamorous to be led to safety) by menacing it with an
endless series of hobgoblins, all of them imaginary.
-H L Mencken
Alger Hiss (out of character)|12.2.08 @ 12:04PM|#
Pro Libertate | December 2, 2008, 11:56am | #
Mo,
If the government designates a private actor as the official
spokesman for an issue, then the independence of that organization
is a matter for consideration.
Incidentally, I don't necessarily have a problem with the NBER or
its conclusions.
It may be of value to you for historical accuracy but NBER numbers
coming out now would have served you no real useful purpose in
conducting your economic affairs in the Summer of '08, or the
previous Winter. You are quibbling over mere econometrics in a
matter worthy of a USA Today editorial board meeting.
(back in character)
Death to capitalist pigs!
robc|12.2.08 @ 12:07PM|#
SIV,
Do you do your own judging at home of gymnastics and figure
skating competitions and award imaginary gold medals to the "real
winners" ?
Actually...no comment. However, Colorado's "half" of the 1990
national championship in football is completely bogus and I dont
acknowledge it.
The olympic committee owns the olympics, they have the authority to
create officials to award the medals. The US Government doesnt own
the economy. No one does. It just exists.
|12.2.08 @ 12:07PM|#
I just think if we are going to use technical terms they
should have technical definitions. Wait a second, is it "just
a fucking label," or is it a technical term?
"Recession" isn't originally a technical term, but a common term.
From the NBER, In general usage, the word recession connotes a
marked slippage in economic activity. Different measures have
been used to describe the relationship between GDP (and many other
economic measures) and a recession. There is no official formula,
though one common rule of thumb is 2 consecutive quarters of
negative GDP growth. That's a big, blunt measure, though, and
bringing in additional data can help you make a better decision
about whether there has been a marked slippage in economic
activity.
robc|12.2.08 @ 12:10PM|#
joe,
There are many common terms that have technical meanings in
specific fields: "work" in physics, for example.
|12.2.08 @ 12:11PM|#
It may be of value to you for historical accuracy but NBER
numbers coming out now would have served you no real useful purpose
in conducting your economic affairs in the Summer of '08, or the
previous Winter.
Nor would figures about GDP growth in the previous two
quarters.
To figure out if you're in a recession in real time, there are
measures like unemployment applications, new home starts, and the
like, but what you gain in timeliness, you lose in precision.
BDB|12.2.08 @ 12:12PM|#
Nobody owns the weather, but I'll take the figures on weather and climate given to me by meteorologists over what my gut says.
|12.2.08 @ 12:14PM|#
There are many common terms that have technical meanings in
specific fields: "work" in physics, for example.
I'd say the economists at the BEA and NBER are conversant with the
specific, technical usage of common terms that have specific
meanings in the field of economics. From the link I provided:
While gross domestic product (GDP) is the broadest measure of
economic activity, the often-cited identification of a recession
with two consecutive quarters of negative GDP growth is not an
official designation...The NBER recession is a monthly concept that
takes account of a number of monthly indicators-such as employment,
personal income, and industrial production-as well as quarterly GDP
growth.
|12.2.08 @ 12:17PM|#
joe,
I swear, if you don't learn how to close italics tags, I'm going to
do a special on you over at Urkobold.
SIV|12.2.08 @ 12:17PM|#
Actually...no comment. However, Colorado's "half" of the
1990 national championship in football is completely bogus and I
dont acknowledge it.
I'm in full agreement with you there.Nice to see them beat the
'dawgs this year.
NBER is not the government.The government does measure GDP
though.
|12.2.08 @ 12:21PM|#
BDB,
To compare this to meteorology, one doesn't even need to go into
argument from authority.
No one owns the weather, but I'll take the predictions of somebody
looking at air pressure, wind speed, wind direction, relative
humidity, temperature, and the change over time for each of those
measures over the prediction of someone who only looks at
temperature.
|12.2.08 @ 12:23PM|#
Only way to settle the argument of Recession/Depression is the
democratic way. All in favor of:
Recession-Press 1
Depression-Press 2
Business as normal/Government screwing things up with
regulation/taxes-Press 3
If 3 caused the Recession/Depression you may vote more than once.
There, now everyone can feel better, it'll be settled, just like
abortion and gun control.
Now, back to regular programming.
BDB|12.2.08 @ 12:23PM|#
"No one owns the weather, but I'll take the predictions of
somebody looking at air pressure, wind speed, wind direction,
relative humidity, temperature, and the change over time for each
of those measures over the prediction of someone who only looks at
temperature."
Yeah, that works too. Better, actually.
sage|12.2.08 @ 12:23PM|#
[bushfart]
C'mon, people. Everyone can see the recession began in January of
2009. They even have the exact day - the 20th. What to make of
that?
[/bushfart]
robc|12.2.08 @ 12:26PM|#
Nice to see them beat the 'dawgs this year.
Revenge against LSU in the Peach seems likely too.
robc|12.2.08 @ 12:27PM|#
Notice that despite the official name as the "Chik-Fil-A Bowl" I still refer to the bowl game in Atlanta as the "Peach Bowl".
|12.2.08 @ 12:38PM|#
robc | December 2, 2008, 12:27pm | #
Notice that despite the official name as the "Chik-Fil-A Bowl" I
still refer to the bowl game in Atlanta as the "Peach
Bowl".'
You got me there. That's a pretty damn good argument.
Chik-fil-A Bowl. Uh, can I get mine with a side of dignity? No, no
you may not.
concerned observer|12.2.08 @ 12:39PM|#
I haven't even posted on this thread yet, wingtard libernuts!
robc|12.2.08 @ 12:43PM|#
joe,
My tags are fine.
See your 12:00 post.
You got me there. That's a pretty damn good
argument.
I knew you would come around. I just hadnt made the right analogy
yet.
|12.2.08 @ 12:46PM|#
joe,
Tsk, tsk. Your mind tricks don't work on me. I quote:
joe,
Its just a fucking label. It matters none at all whether it is official or not. Different people define it differently.i>
Then why have you spent all of this effort insisting that the NBER's definition is wrong, and your right?
Clearly evident in your posting is the unclosed and improperly constructed italics tag! For the world to see! J'accuse!
|12.2.08 @ 12:46PM|#
Before there was such a thing as macroeconomic policy, or the
notion that the Federal government ran the economy, there was a
private research organization called the National Bureau of
Economic Research that collected information about economic
performance over time. They were especially interested in the
"Business Cycle." The data was pretty poor, but such as it was,
they collected it, and analyized it. What is pro-cyclical? What is
counter-cyclical? What is noncyclical? What leads? What lags? They
came up with the expansion, contraction, peak, and trough
terminology.
They are still at it, with the much better economic data generated
by the government.
If you had read your econ text carefully, you would have seen that
two consecutive quarters of negative GDP growth was never the
definition of recession. It has always been a bit vague what it
would be exactly. Broad and sustained reduction in economic
activity.
In my opinion, if _real_ GDP is below long term trend growth bath,
then there may be a problem. Generally, with growing productivity
and labor force, real production "should" grow at about 3% a year.
Now, perhaps the labor force might grow less for a time. Maybe
there is a slow period for productivity growth. But.. generally,
the economy should be "growing" at about 3% a year.
But, the NBER doesn't define recessions as the economy failing to
grow at capacity or excessive unemployment. They instead look at
the direction of economic activity. Is it expanding or
contracting?
It is always "real" and never "per capita."
As for Wiki's theory of the difference between
recession and depression... I don't believe it.
They were all depressions before the great depresssion, and then we
started calling them
recessions.
|12.2.08 @ 12:46PM|#
Oops, missed that one.
Not just the right analogy, the precise example. Chik-fil-A Bowl?
Who's going to defend that?
robc|12.2.08 @ 12:53PM|#
In the old days, the Poulan Weedeater Independence Bowl was the one to make fun of. But, yeah, Chik-fil-a Bowl (as tasty as they are) is just bad.
|12.2.08 @ 12:53PM|#
joe,
I thought of that, but I decided it was too cutesy for this
particular posting. However, in a fit of generosity, I'll give it
to your regular opponents hereabouts. In fact, I demand that they
use that (with italics to illustrate its foreign origins and
contempt for your non-italical ways) to open all diatribes against
you.
BDB|12.2.08 @ 12:54PM|#
Look, they have a fucking Flomax Bowl now. Chick-Fil-A is hardly the worst offender.
The Angry Optimist|12.2.08 @ 12:57PM|#
I still call it the "Citrus Bowl". "Capital One Bowl" is laaaaaame.
|12.2.08 @ 1:15PM|#
Can't spell Citrus without "UT".
Man, am I bitter at the idea of friggin' Tennessee stealing the God
Coordinator Monte Kiffin from the Bucs. Egad.
robc|12.2.08 @ 1:55PM|#
TAO,
As SIV points out the Florida Citrus council bought out the
Tangerine Bowl and changed the name. So, it changing to Cap 1 Bowl
isnt really any different.
Pro Lib,
Im hoping Monte Kiffin means one extra loss for ugag every
year.
Naga Sadow|12.2.08 @ 1:56PM|#
Pro Lib,
Seriously though, I have clout at the Superdome. I've been waiting
to call in my chip for a wildcard game involving the Saints.
Impossible this season thanks to the Bucs recent win.
Peter K.|12.2.08 @ 2:06PM|#
wow lots of comments.
"More here, including a section about President Bush that seems to
contradict Bernanke's this-ain't-the-'30s view:"
Not really. Technically Bernanke said we're not in the next Great
Depression currently at the moment.
Bush said Bernanke and Paulson told him we will enter the next
Great Depression if we do nothing. Bush ain't as bad as the
peaceniks believe.
In other words, they were contradicting John McCain's Baghdad Bob
moment during the campaign when he said "the fundamentals of the
economy are sound" right before Lehman brothers failed.
mike farmer|12.2.08 @ 6:38PM|#
I think if the Obama's would just announce their dog, the gloom would lift and we can all be consumers again.
|12.2.08 @ 7:52PM|#
Look, they have a fucking Flomax Bowl now.
Flowmax...Bowl? Bowl?!?
Noooooooooooo!!!!!!!!!!!
|12.3.08 @ 3:24PM|#
Still, the Fed chief said lessons learned from the Depression may still apply today, including the "excessively tight monetary policy" that led to higher interest rates and deflation of about 10 percent a year over the first three years of the 1930s.
There is about as much relation between a tight monetary policy and
the current bailout spree, as there is between a bout of
constipation and an enema with a firehose.
|12.8.08 @ 10:32AM|#
Even the republicrats and evangelicrats are now supportive of this great general, who stood up to be counted and for America...not like Powell and the other Bush/Cheney cronies. Another super addition to a team that will turn out to be the greatest administration that this country has ever had. And Lord knows that this is what our country needs. The "rats" now don't even talk about the Pres Bush, who seems missing, but keeps harping on about Obama who has not even taken the oath as yet. I remember how talk radio kept referring to him as the "messiah" and their wishes will come true on 20th Jan. That is what this country needs now to lead our great nation out of this abyss.
fred|11.12.09 @ 10:45AM|#
As a “Brit” visiting Panama City I am particularly interested in
the debate about your government’s healthcare plans, and if some
of your readers may not be familiar with our UK National Health
Scheme perhaps I can give you some idea of how it works, based on
my own recent experiences:
1 Some five years ago I collapsed at home and had to be admitted
to hospital suffering with an internal bleed. I stayed in
hospital for nine days, on a drip and having a blood transfusion,
until an exploratory operation cured this diverticular problem,
and out I came – all this being free of charge (FOC).
2 I am now called back to that hospital annually to undergo an
exploratory check to ensure that all is well and that there is no
sign of tumors – again, FOC.
3 Three years ago I was diagnosed with high blood pressure during
a routine visit to my doctor; I now take a daily tablet to ensure
I’m OK and visit him every six months for blood tests, a blood
pressure check and to renew my prescription for tablets – again,
FOC (although if I were under 60 years old this prescription
would cost me about $10 per month and really make me
grumble!).
4 I can normally get an appointment to see my regular doctor
within a week or so; if I have an emergency, I can be seen the
same day by either him or one of his colleagues in the practice –
FOC. My records are on computer and can be called up by any of
the doctors.
The income tax and National Insurance contributions that I’ve
made during my working life go towards, among other things,
maintaining our National Health Service, and I can look back and
think what wonderful foresight our post-war government had –
against many odds – to set up this service; and by the way – I’m
not one of your dreaded socialists! Not only do I personally have
good cause to feel grateful for this system, but I also recognize
what a boon it is for everyone, in particular for those – and
there are many – who are unable to afford healthcare. I think it
is the mark of a civilized society when government sees it as a
duty to provide all its citizens with a degree of free
healthcare. I realize that our two systems have developed in
different ways, and that there is strong opposition to changing
yours. Ours is by no means perfect, but we have much to be
thankful for!
Pete Fenn
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